BILL ANALYSIS
AB 2244
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 2244 (Feuer)
As Amended August 20, 2010
Majority vote
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|ASSEMBLY: |50-25|(June 1, 2010) |SENATE: |22-11|(August 25, |
| | | | | |2010) |
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Original Committee Reference: HEALTH
SUMMARY : Requires guaranteed issue of health plan and health
insurance (collectively carriers) products for children
beginning in January 1, 2011. Conforms provisions related to
guaranteed issue with federal law, as specified, and any rules
or regulations adopted pursuant to federal law.
The Senate amendments :
1)Delete all provisions referencing carrier coverage for adults
over 19 years of age.
2)Prohibit preexisting condition provisions of a carrier policy
or contract from excluding coverage for a period beyond six
months following the individual's effective date of coverage
and permit them to only relate to conditions for which medical
advice, diagnosis, care, or treatment, including prescription
drugs, was recommended or received from a licensed health
practitioner during the six months immediately preceding the
effective date of coverage.
3)Prohibit, not withstanding 1) above, a carrier policy or
contract offered to a small employer from imposing any
preexisting condition provisions upon any child under 19 years
of age.
4)Permit a carrier that does not utilize a preexisting condition
provision to impose a waiting or affiliation period, not to
exceed 60 days, before the coverage issued becomes effective.
Prohibit, during the waiting or affiliation period premiums
from being charged to the enrollee or the subscriber.
5)Require a plan, in determining whether a preexisting condition
provision or waiting or affiliation period applies to any
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person, to credit the time the person was covered under
creditable coverage, provided the person becomes eligible for
coverage under the succeeding carrier contract within 62 days
of termination of prior coverage, exclusive of any waiting or
affiliation period, and applies for coverage with the
succeeding carrier contract within the applicable enrollment
period. Require a carrier to also credit any time an eligible
employee must wait before enrolling in the plan, including any
affiliation or employer-imposed waiting or affiliation period.
6)Require, if a person's employment has ended, the availability
of health coverage offered through employment or sponsored by
an employer has terminated, or an employer's contribution
toward health coverage has terminated, a plan to credit the
time the person was covered under creditable coverage if the
person becomes eligible for health coverage offered through
employment or sponsored by an employer within 180 days,
exclusive of any waiting or affiliation period, and applies
for coverage under the succeeding carrier contract within the
applicable enrollment period.
7)Permit, in addition to the preexisting condition exclusions in
2) above and the waiting or affiliation period authorized in
4) above, carriers providing coverage to a guaranteed
association to impose on employers or individuals purchasing
coverage who would not be eligible for guaranteed coverage if
they were not purchasing through the association a waiting or
affiliation period, not to exceed 60 days, before the coverage
issued subject becomes effective. Prohibit, during the
waiting or affiliation period, no premiums to be charged to
the enrollee or the subscriber.
8)Require an individual's period of credible coverage to be
certified pursuant to the federal Public Health Services Act.
9)Prohibit a carrier policy or contract issuing group coverage
from imposing a preexisting condition exclusion to a condition
relating to benefits for pregnancy or maternity care.
10)Prohibit a carrier policy or contract that covers three or
more enrollees from excluding coverage for any individual on
the basis of preexisting condition provision for a period
greater than six months following the individual's effective
date of coverage. Permit preexisting condition provisions
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contained in carrier policies and contracts to relate only to
conditions for which medical advice, diagnosis, care, or
treatment, including use of prescription drugs, was
recommended or received from a licensed health practitioner
during the six months immediately preceding the effective date
of coverage.
11)Prohibit a carrier contract that covers one or two
individuals from excluding coverage on the basis of a
preexisting condition provision for a period greater than 12
months following the individual's effective date of coverage
or the carrier policy or contract to limit or exclude coverage
for a specific enrollee by type of illness, treatment, medical
condition, or accident, except for satisfaction of a
preexisting condition clause.
12)Prohibit a carrier policy or contract offered for group
coverage from imposing any preexisting condition provision
upon any child under 19 years of age.
13)Prohibit a carrier policy or contract for individual coverage
that is not grandfathered within the federal Patient
Protection and Affordable Care Act (PPACA), as specified, from
imposing any preexisting condition provision upon any child
under 19 years of age.
14)Delete the definitions for "Individual," "In force business,"
"New business," Rating period," "Risk-adjusted individual risk
rate," "Risk adjustment factor," and "Risk category."
15)Define "Individual grandfathered plan coverage" as health
care coverage in which an individual was enrolled on March 23,
2010, consistent with PPACA, as specified, and any rules or
regulations adopted pursuant to PPACA.
16)Define "Initial open enrollment period" as the open
enrollment period beginning on January 1, 2011, and ending 60
days thereafter.
17)Define "Late enrollee" as a child without coverage who did
not enroll in a health care service plan contract during an
open enrollment period because of any of the following:
a) The child lost dependent coverage due to termination or
change in employment status of the child or the person
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through whom the child was covered; cessation of an
employer's contribution toward an employee or dependent's
coverage; death of the person through whom the child was
covered as a dependent; legal separation; divorce; loss of
coverage under the Healthy Families Program, the Access for
Infants and Mothers Program, or the Medic-Cal Program; or
adoption of the child;
b) The child became a resident of California during a month
that was not the child's birth month;
c) The child is born as a resident of California and did
not enroll in the month of birth; or,
d) The child is mandated to be covered pursuant to a valid
state or federal court order.
18)Define "Open enrollment period" as the annual enrollment
period, subsequent to the initial open enrollment period,
applicable to each individual child that is the month of the
child's birth date.
19)Define "PPACA" as the federal Patient Protection and
Affordable Care Act (Public Law 111-148), as amended by the
Health Care and Education Reconciliation Act of 2010 (Public
Law 111-152), and any subsequent rules or regulations issued
pursuant to that law.
20)Revise the definition of "Pre-existing condition exclusion,"
with respect to coverage, to mean a limitation or exclusion of
benefits relating to a condition based on the fact that the
condition was present before the date of enrollment of the
coverage, whether or not any medical advice, diagnosis, care,
or treatment was recommended or received before that date.
21)Revise the definition of "Responsible party for a child," as
an adult having custody of the child or with responsibility
for the financial needs of the child, including the
responsibility to provide health care coverage.
22)Define "Standard risk rate," as the lowest rate that can be
offered for a child with the same benefit plan, effective
date, age, geographic region, and family status.
23)Delete age and family size categories used to determine
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premium rates.
24)Require, during each open enrollment period, every carrier
offering carrier policies or contracts in the individual
market, other than individual grandfathered carrier coverage,
to offer to the responsible party for the child coverage for
the child that does not exclude or limit coverage due to any
preexisting condition of the child.
25)Prohibit a carrier offering coverage in the individual market
from rejecting an application for a carrier policy or contract
from a child or filed on behalf of a child by the responsible
party during an open enrollment period or from a late enrollee
during a period no longer than 63 days from the qualifying
event listed, as specified.
26)Prohibit a carrier, except to the extent permitted by federal
law, rules, regulations, or guidance issued by the relevant
federal agency, from conditioning the issuance or offering of
individual coverage on any of the following factors:
a) Health status;
b) Medical condition, including physical and mental
illness;
c) Claims experience;
d) Receipt of health care;
e) Medical history;
f) Genetic information;
g) Evidence of insurability, including conditions arising
out of acts of domestic violence;
h) Disability; and,
i) Any other health status-related factor as determined by
the Department of Managed Health Care (DMHC) or the
California Department of Insurance (CDI).
27)Prohibit the provisions in this bill from applying to a
carrier policy or contract providing individual grandfathered
plan coverage.
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28)Require when a responsible party for a child submits a
premium, based on the quoted premium changes, and that payment
is delivered or postmarked, whichever occurs earlier, within
the first 15 days of the month, coverage under the carrier
policy or contract is to become effective no later that the
first day of the following month.
29)Require, when the payment referenced in 28) above is neither
delivered nor postmarked until after the 15th day of the
month, coverage is become effective no later than the first
day of the second month following delivery or postmark of the
payment.
30)Prohibit a carrier offering coverage in the individual market
from rejecting the request of a responsible party for a child
to include that child as a dependent on an existing carrier
policy or contract that includes dependent coverage during an
open enrollment period.
31)Prohibit the provision in this bill from being construed to
prohibit a carrier offering coverage in the individual market
from establishing rules for eligibility for coverage and
offering coverage pursuant to those rules for children and
individuals based on factors otherwise authorized under
federal and state law for carrier policies and contracts in
addition to those offered on a guaranteed issue basis during
an open enrollment period to children or late enrollees.
32)Prohibit a carrier, other than those providing individual
grandfathered coverage, from imposing a preexisting condition
provision on coverage, including dependent coverage, offered
to the child.
33)Prohibit the provisions in this bill from being construed to
prevent a carrier from offering coverage to a family member of
an enrollee in grandfathered carrier coverage consistent with
PPACA, as specified.
34)Prohibit the provisions of this bill from applying to carrier
policies or contracts for coverage of Medicare services
pursuant to contracts with the United States government,
Medicare supplement contracts, Medi-Cal contracts with the
State Department of Health Care Services, plan contracts
offered under the Healthy Families Program, long-term care
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coverage, or specialized carrier policies or contracts.
35)Require, upon the effective date of the provisions of this
bill, a carrier to fairly and affirmatively offer, market, and
sell all of the carrier's policies and contracts that are
offered and sold to a child or the responsible party for a
child in each service area in which the carrier provides or
arranges for the provision of health care services during any
open enrollment period, to late enrollees, and during any
other period in which state and federal law, rules,
regulations, or guidance expressly provide that a carrier is
prohibited from conditioning an offer or acceptance of
coverage on any preexisting condition.
36)Prohibit a carrier from directly or indirectly engaging in
the following activities:
a) Encourage or direct a child or responsible party for a
child to refrain from filing an application for coverage
with a carrier because of the health status, claims
experience, industry, occupation, or geographic location,
provided that the location is within the carrier's approved
service area, of the child; and,
b) Encourage or direct a child or responsible party for a
child to seek coverage from another carrier because of the
health status, claims experience, industry, occupation, or
geographic location, provided that the location is within
the carrier's approved service area, of the individual or
child.
37)Prohibit a carrier from directly or indirectly, entering into
any contract, agreement, or arrangement with a solicitor that
provides for or results in the compensation paid to the
solicitor for the sale of a carrier policy or contract to be
varied because of the health status, claims experience,
industry, occupation, or geographic location of the child.
38)Permit a carrier from using the following characteristics of
an eligible child for purposes of establishing the rate of the
carrier policy or contract for that child, where consistent
with federal regulations under PPACA:
a) Age;
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b) Geographic region; and,
c) Family composition, plus the carrier policy or contract
selected by the child or the responsible party for the
child.
39)Require, from the effective date of the provisions of this
bill to December 31, 2013, inclusive, rates for any child
applying for coverage to be subject to the following
requirements:
a) Prohibit, during any open enrollment period or for late
enrollees, the rate for any child due to health status from
being more than two times the standard risk rate for a
child;
b) Require the rate for a child to be subject to a 20%
surcharge above the highest allowable rate on a child
applying for coverage who is not a late enrollee and who
failed to maintain coverage with any carrier for the 90-day
period prior to the date of the child's application.
Require the surcharge to apply for the 12-month period
following the effective date of the child's coverage;
c) Permit, if expressly permitted under PPACA and any
rules, regulations, or guidance issued pursuant to PPACA, a
carrier to rate a child based on health status during any
period other than an open enrollment period if the child is
not a late enrollee;
d) Permit, if expressly permitted under PPACA and any
rules, regulations, or guidance issued pursuant to PPACA, a
carrier to condition an offer or acceptance of coverage on
any preexisting condition or other health status-related
factor for a period other than an open enrollment period
and for a child who is not a late enrollee;
e) Require, for any individual carrier policies or
contracts issued, sold, or renewed prior to December 31,
2013, the health plan to provide to a child or responsible
party for a child a notice that states the following:
"Please consider your options carefully before failing
to maintain or renew coverage for a child for whom you
are responsible. If you attempt to obtain new
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individual coverage for that child, the premium for
the same coverage may be higher than the premium you
pay now."
f) Require a child who applied for coverage between
September 23, 2010, and the end of the initial open
enrollment period to be deemed to have maintained coverage
during that period;
g) Require, effective January 1, 2014, except for
individual grandfathered carrier coverage, the rate for any
child to be identical to the standard risk rate; and,
h) Permit carriers to require documentation from applicants
relating to their coverage history.
40)Require all carrier policies or contracts offered to a child
or on behalf of a child to a responsible party for the child
to conform to the requirements, as specified and to be
renewable at the option of the enrollee or responsible party
for a child on behalf of the enrollee except as permitted to
be canceled, rescinded, or not renewed.
41)Require any carrier that ceases to offer for sale new
individual carrier policies or contracts pursuant to existing
law to continue to be governed by the provisions of this bill.
42)Require, except as authorized under existing law, a carrier
that, as of the effective date of the provisions of this bill,
does not write new carrier policies or contracts for children
in California or ceases to write new carrier policies or
contracts for children in California from offering for sale
new individual carrier policies or contracts in California for
a period of five years from the date of notice to the director
of DMHC or the Insurance Commissioner.
43)Permit, on or before July 1, 2011, the Director of DMHC and
the Insurance Commissioner to issue guidance to carriers
regarding compliance with the provisions in this bill and
prohibits guidance from being subject to the Administrative
Procedures Act, as specified. Require the guidance to only be
effective until the director of DMHC or the Insurance
Commissioner adopt joint regulations pursuant to the
Administrative Procedure Act.
44)Delete provisions related to risk adjustment factors applied
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to a child.
45)Delete the provisions related to carrier disclosure
requirements.
46)Make other technical and clarifying changes.
EXISTING FEDERAL LAW :
1)Establishes the PPACA which requires each carrier that offers
health insurance coverage in the individual or group market to
accept every employer and individual that applies for such
coverage. This requirement is known as "guaranteed issue."
Permits a carrier to restrict enrollment in coverage to open
or special enrollment periods. Requires a carrier to
establish special enrollment periods for qualifying events.
Requires the federal Secretary of the Department of Health and
Human Services to promulgate regulations regarding enrollment
periods and qualifying events.
2)Establishes, under PPACA, rating factors for individual and
small group health insurance, effective January 1, 2014, that
prohibit rates from varying with respect to the particular
plan only by the following factors:
a) Whether the plan or coverage covers an individual or
family;
b) The geographic rating area (each state must establish
one or more rating areas within the state);
c) Age, except that rates are prohibited from varying by
more than 3 to 1 for adults, consistent with federal law;
and,
d) Tobacco use, except that rates are prohibiting from
varying by more than 1.5 to 1.
3)Prohibits a carrier from imposing any pre-existing condition
exclusion. This provision becomes effective for adults in
2014 and for children on September 23, 2010.
4)Requires carriers to maintain minimum essential health
coverage, establishes phased-in tax penalties for failure to
maintain such coverage, and allows exemptions from this
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requirement, such as for religious reasons, hardship, or
because an individual is low-income. Requires the minimum
essential health coverage to take effect on January 1, 2014.
This requirement is referred to as the "individual mandate."
EXISTING STATE LAW :
1)Licenses and regulates health plans, by the Department of
Managed Health Care (DMHC), and health insurers, by the
California Department of Insurance (CDI).
2)Does not require guarantee issue or limit the premiums for
individuals in the individual health insurance market, except
premiums are regulated for individuals eligible under federal
law who previously had 18 months of group coverage and who
have exhausted COBRA/Cal-COBRA coverage.
3)Establishes requirements for health plans that provide
coverage to small employers. Specifically, this body of law:
a) Requires health plans to fairly and affirmatively offer,
market, and sell health coverage to small employers. This
is known as "guaranteed issue;"
b) Requires health plans to offer, market, and sell all of
the health plan's contracts that are sold to small
employers, to any small employers in each service area in
which the plan provides health care services. This is
known as an "all products" requirement;
c) Requires renewal of coverage, at the option of the
policyholder, unless there is fraud or nonpayment of
premium or the health plan leaves the market. This is
known as "guaranteed renewal;" and,
d) Restricts a plan's ability to set initial and renewal
premium rates to a group of specified risk categories (age,
region, family size, and health benefit plan) and allows
only a limited premium variance of plus or minus 10 percent
from a standard rate based on health status. The
limitation on premium variance is referred to as "rate
bands."
4)Limits pre-existing condition exclusions to six months from
the individuals' effective date of coverage, with a
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requirement that health plans credit policyholders for the
time the individual was covered under previous coverage.
5)Prohibits pre-existing condition exclusions of more than 12
months in policies and contracts covering one or two
individuals, with a requirement that plans credit enrollees
for the time the individual was covered under prior coverage.
AS PASSED BY THE ASSEMBLY , this bill was substantially similar
to the version passed by the Senate.
FISCAL EFFECT : According to the Senate Appropriations
Committee, this bill will result in costs of $365,000 to the
Insurance Fund for CDI oversight in fiscal year (FY) 2010
through 2011 and is likely to cost in the hundreds of thousands
of dollars in FY 2010 through 2011 to the Managed Care Fund for
DMHC oversight.
COMMENTS : According to the author, the newly enacted federal
health care reform law prohibits use of pre-existing condition
exclusions for children in the individual market. The author
maintains there was a dispute between insurers and the federal
government about whether the new federal law requires guaranteed
issue and this bill would clarify that for California.
According to the author, the new federal law also does not
specifically address rating rules in the individual market prior
to 2014 or prohibit insurers from refusing to sell to entire
market segments. The author maintains that this bill will align
California law with the federal health care reform law and will
ensure that children cannot be denied health insurance coverage
or be charged more because of a pre-existing condition.
On March 23, 2010, President Obama signed the PPACA. Among
other provisions, the new law prohibits group health plans or
individual health insurance carriers from imposing any
preexisting condition exclusion on coverage. The rollout of the
law begins with children. On September 23, 2010, insurers will
no longer be able to exclude children with preexisting
conditions from being covered by their family policies. For
current policies, that means insurers will have to rescind
pre-existing-condition exclusions. Insurers will not have to
take the same steps for adults until January 2014.
Analysis Prepared by : Tanya Robinson-Taylor / HEALTH / (916)
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319-2097
FN: 0006747